Freight Transport Reforms Can Accelerate India-Bangladesh Trade: CUTS

November 16, 2013, Kolkata, West Bengal
Allowing cargo hauling trucks to enter into each other’s’ territory through a bilateral Motor Vehicle Agreement can benefit India-Bangladesh trade immensely, said Pradeep S Mehta, Secretary General of CUTS International. He was speaking on the occasion of a two day conference organised by CUTS International entitled ‘Assessment of Bangladesh-India Trade Potentiality: Need for Cross-Border Transport Facilitation & Mutual Recognition of Standards’, held in Kolkata on 15-16 November, 2013.

Though bilateral trade has growth over 5 times in a decade, it still remains far below potential because of excessive trade costs. A wide-ranging reform package including new land customs stations and modern cargo transport infrastructure will help to save about 800 million US$ on value of traded goods as cost of trade will come down substantially. This will enhance commercial viability and thereby open up immense opportunities to trade new products.

A series of facilitative reforms by India and Bangladesh which are already underway are set to propel bilateral trade to new heights, said Abida Islam, Deputy High Commissioner, Bangladesh High Commission, Kolkata.

Speaking at the conference, S K Sinha, Commissioner of Customs, Ministry of Finance, Department of Revenue, Government of India, mentioned that upgradation of the customs station at Petrapole, West Bengal, into and Integrated Check Post (ICP) is being carried out on a priority basis and is expected to be completed by April, 2013. Petrapole is currently one of the largest overland cross-border cargo transport station in South Asia, accounting for the bulk of India-Bangladesh trade.

It has been known for long that goods getting unloaded and re-loaded at the border points has been a highly inefficient way of transport, in terms of the amount of time and money involved. It is a welcome development that India and Bangladesh have decided to consider a Motor Vehicle Agreement that would do away with this inefficient practice, allowing trucks from both sides to move across the border.

CUTS is undertaking a project to assess the benefits of implementation of this Agreement and another one on sanitary standards imposed on primary products. As numerous primary products are being traded, mutual recognition of standards will help to bring down compliance costs for traders. Both these bilateral Agreements will go a long way in boosting India-Bangladesh trade relationship, and thereby have a positive influence on overall regional trade in South Asia.

The CUTS project will also examine the implementation concerns of the proposed bilateral agreements and assist the policy makers with that learning. The study will assess welfare outcomes and will look into the possibilities of other similar issue-specific agreements elsewhere in the region.

Mustafizur Rahman, Executive Director, Centre for Policy Dialogue, Dhaka said that both countries should now consider developing deeper economic connectivity with trade, transport and investment as its three main components. He warned that South Asian countries hae no choice but to proceed with trade facilitation reforms in the light of substantial changes that are taking place in global trade scene. Huge preferential trading arrangements elsewhere in the world like the Trans Pacific Partnersh

ip (TPP) are threatening to disturb traditional markets of countries like India and Bangladesh.

Bipul Chatterjee, Deputy Executive Director, CUTS International underscored the importance for regionalising the bilateral trade negotiation outcomes between India and Bangladesh. Good practices that both countries are going to embrace should set examples for trade relations between other countries in the region. Reforms should be undertaken with a broader outlook by keeping consumer and producer welfare gains in mind.

Speakers highlighted that the huge trade deficit that Bangladesh maintains with India is not a cause for worry. The populist alarm raised on trade deficits can be misguiding. In reality, raw material imports from India can further boost the overall trade surplus of Bangladesh.

Both countries are urged to take forward the bilateral trade reform agenda so as to benefit stakeholders who are directly involved. The conference was attended by resource persons representing government bodies, apex chambers of business and industry, trade service providers, business consultants from India, Bangladesh, Pakistan and Nepal.

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